The prospect of a Corbyn government should prompt HNWs to think about their pre-nups as well as their tax structure, writes Jane Keir
The Labour Party’s recently published Land for the Many report – which proposes ‘radical but practical changes in the way land in the UK is used and governed’ – did nothing to quell fears of sweeping tax increases and a squeezing of the wealthy, should Labour accede to power.
It is no surprise, then, that many private client law firms are reporting that the super-rich are mobilising, seeking advice on moving their wealth off-shore. Indeed, there are so many reports that The Sunday Times has dubbed the prospect of the super-rich taking up to £1 trillion out of Britain should Jeremy Corbyn enter Downing Street as the ‘Corbygeddon’. Some will move homes and businesses as well as finances. So should divorce protection planning for couples contemplating a move out of the UK, either before or after marriage, be taken into account too?
Towards the end of last year I was asked by a client how a potential move to the US might affect her prenuptial agreement. Leaving aside the tax ramifications of such a move, how do we approach the question of which country has jurisdiction where a couple has moved away from England?
The chances are that almost any other jurisdiction where pre- and post-nuptial agreements are used routinely will be more likely to uphold their terms and provisions than England and Wales. That is not to say that English and Welsh courts never uphold them, but our law is clear in that they are not upheld as a matter of course. Only the Judge has the ultimate say as to what weight is placed upon their provisions in the event of the divorce.
It might well be, therefore, that a move off-shore and to a jurisdiction where pre- and post-nuptial agreements are used routinely as a part of a family’s wider financial planning and organisation might provide an added incentive for the party seeking to rely upon the terms of an English pre-nuptial agreement (often this is the wealthier spouse).
Wise counsel would be to review the terms of any pre-nuptial agreement in contemplation of any such move and to consider entering into a separate post-nuptial agreement so that both spouses know where they stand. They may also wish to seek further independent legal advice and can gauge the ramifications of any move off-shore in terms of the arrangements to be made for their family and the longevity of their marriage.
Any married couple contemplating a move to live in another jurisdiction might be prudent to review their financial circumstances, setting out their hopes and aspirations in the terms of a post-nuptial agreement.
Moving countries can often produce strains on a marriage, regardless of the motivation for the move. It is always a good idea to have agreed parameters for financial division in case a marriage does break down. Such agreements can provide something of an anchor in more turbulent times and may prove hugely important in coming to terms with all that such move will entail.
Jane Keir is Family & Divorce partner at Kingsley Napley